IMPACT OF INTEREST RATES ON STOCK PRICE IN NEPAL

Abstract

The NEPSE Index is the primary subject of this study, which investigates the dynamics that exist between interest rates and the Nepalese stock market. The index serves as an all-encompassing indicator of market performance. The study explores the impacts of margin loan interest rates, bank rates, deposit rates, lending rates, and 91-day T-Bill rates that are obtained from Nepal Rastra Bank. The data used in the research spans numerous years. The research reveals the complex links that exist between these interest rates and the NEPSE Index by using both descriptive and causal analysis. In contrast to the negative effect that increased lending rates have on stock values, the results of the most important research indicate that bank rates have a beneficial influence on stock prices. The interest rates on deposits have a positive correlation, but the interest rates on margin loans and Treasury bills have very minimal influence. For policymakers who are interested in understanding the implications of changes in interest rates on market stability and investor behavior in Nepal's expanding financial ecosystem, these findings give useful implications that may be used to provide valuable insights.